The Parliament of Canada approved the world’s first national law on digital currencies, on June 19, 2014.
Bitcoin was created back in 2009, by Satoshi Nakamoto. It is based on a decentralized, peer-to-peer (P2P) network that is defined by codes. The specialty of Bitcoin is that it requires no interference of any central authority, such as banks.
However, this concealment has led it to become a hotspot for criminal and illegal activities. Thus, the implementation of laws on certain factors will hopefully prevent businesses from carrying out any offenses intentionally or unintentionally.
Digital Currency MSBs (Money service business) are required to oblige with the following regulations:
- Report suspicious transactions to FINTRAC – there is no specific threshold (dollar amount) that is meant to trigger these reports.
- Report terrorist property transaction to FINTRAC – when and if a property is owned by a listed person or terrorist group it should be reported to FINTRAC.
- Large cash transactions should be reported to FINTRAC when they receive an amount of $10,000 or more.
- Electronic funds – Electronic funds transfer take place through credit card or wire transfer. If an amount of $10,000 or more is sent outside or received outside of Canada, it should be reported to FINTRAC.
- Ascertaining ID – Verification is highly important when conducting any transaction. ID verification is essential.
- Records retention – Keep a record of Large cash transactions and third-party transactions.
- Risk Assessment – Carry out an analysis to evaluate and identify if any risk of money laundering or other potential threats the business is being exposed to.
- Compliance regime – Required to hire a compliance officer that ensures all verification rules and other obligations of PCMLTFA (Proceeds of Crime (Money Laundering) and Terrorist Financing Act) are being followed.
- Criminal offenses – Failure to comply with these rules under PCMLTFA can subject to imprisonment and fines.
All Digital Currency Businesses must subject to the verification procedures, record keeping, suspicious transaction reporting and registration requirements under the PCMLTFA as a money service business.
MSBs are required to register with FINTRAC. Once registration is complete, they must implement a complete anti-money laundering compliance regime.